Corporate
concepts of CEO pay are beginning to make their way into the world of
traditional higher education. Stephen Pollack from a human resource consulting
firm in San Francisco states “Corporate
concepts are just starting to drift into academia, and they have to” (1). Recent concerns about college presidents performance
mixed with the relative static nature of higher education institutes are
bubbling up.
College
performance has been under an increasing microscope and retention has become a
larger issues. University education is expensive and some are wondering about
the cost and benefit of certain programs. As universities increase in
competitiveness some boards are considering using additional performance pay
metrics with university presidents.
Likewise,
the Department of Education is seeking to use data metrics to evaluate the
success of universities in educating students for the job markets (2). The
pressure for performance is rising and presidents are likely to feel the brunt
of these actions. As changes in the American higher education system becomes
more likely so will the compensation approaches for educational executives.
The devil is
always in the details. Presidents of universities are normally not in the same
stream as CEO’s of companies. Yet their performance is just as important.
Universities are relatively stable and unchanging over the past decades and
hence the simple salary system worked fine. Now that the system is under
pressure for change some universities are seeking to change their compensation
structures.
In higher
education presidents have a higher responsibility to encourage learning and
ensure that the university works at its optimal level. Performance compensation
may be tied to retention rates, financial performance, or even scientific products
but none is going to be a perfect solution.
The metric mix will be what counts.
Moving the
metric pendulum too far into performance is likely to create short-term
decisions that can be disastrous a few years down the road. Using a straight salary may encourage a lack
of overall performance as presidents will need to change with the times. Since
performance metrics are new in higher education it will be necessary to engage in
some compensation experimentation. Slowly including various performance metrics
into the compensation package will naturally have an impact so they should be
included with some caution and over a period of time to ensure performance is
matching pay.
